I wanted to share my experience setting up payroll and health benefits for our startup. Our company started with Trinet and ended up switching to Gusto, saving thousands of dollars over the course of the year. This post is meant to help other startups and small businesses save time and money getting their benefits setup.
I’m not an accountant or an HR specialist, just a startup founder trying to get stuff done in the most efficient way possible.
When we launched our company, we had three team members making us ineligible for plans associated with Gusto and Zenefits. We wanted to set the company up with group benefits, so we went with Trinet, which ended up being a very expensive service: signup fee of $2,500 plus a $125 per employee per month. They are PEO and they “hire” your team making everyone “employees”. With Trinet, Federal tax payments use their FEIN, and City withholding (for State withholding, Trinet setup a number on our behalf ). Onboarding should be smooth sailing but, it required a ton of phone calls and paper documents for signing and scanning. Using Trinet as your broker for health insurance doesn’t appear to provide any additional discounts, their rates are competitive but no better than any other service I’ve seen. They do have some additional benefits like discounts at hotels and stores, but our small team didn’t take advantage of these.
Once signed up with Trinet they take care of tax numbers and filing on your behalf, so you don’t need to know what you’re doing. However, ignorance carries a hefty price tag! If you do know what you’re doing or feel inclined to figure it out, it’s much less expensive to sign up for Gusto’s service.
If you’re a four-person team, you can sign up for Gusto who will act as the broker for your health benefits. If you’re under four, as were we, you can work with a private broker to get you signed up for the current year and switch to Gusto for the following year. You can also keep your private broker, but your new employees won’t be able to signup via Gusto UI, which is extremely user-friendly. In Colorado, only two people are required to enroll in United Health Insurance to be eligible for a group plan. At the time of writing this, Gusto Core is $39/month + $6/employee, $57 per month for a team of three. Compare this to $1000 a month with Trinet, who after eight months at $125/month, required a minimum monthly fee of $1000. For our team of three Trinet was 17.5X more expensive than Gusto. I also preferred Gusto’s UI and streamlined signup.
Unlike Trinet, Gusto doesn’t hire your employees. So taxes are your responsibility and you’ll need to get Federal, State, and City tax numbers. Gusto does calculate tax payments and automatically sends them to agencies on your behalf, making it easy and automatic. To set this up you simply enter your tax IDs into Gusto.
Transitioning away from Trinet was harder and more confusing than expected due to taxes. Trinet signed us up for our own State withholding number, so I had to call the State Department to get our number. I made a mistake when transitioning to our own EIN and City of Denver withholding numbers indicating that our company had three employees. Technically we did have three employees, but we were all employees of Trinet, remember? I should have said the company existed with ZERO employees, by indicating we three employees the tax agencies came looking for payment with late penalties. This issue was ultimately resolved, but it took some additional forms and effort.
None of this is rocket science. It’s super easy to set up and use these services.
If you found this post helpful and plan on signing up for Gusto use my referral link and we’ll both get a $100 Amazon gift card. :)
